Regulators OK deal between Nevada Power, Switch

State utility regulators on Wednesday approved an agreement worked out between the date storage company Switch and Nevada Power Co. to keep the company as a customer of the utility and avoid the potential of a rate hike for all rate payers.

By Sean Whaley Review-Journal Capital Bureau

October 1, 2015 - 8:45 am

Switch data center near South Decatur Boulevard and West Warm Springs Road in Las Vegas is seen on Tuesday, April 21, 2015. (Erik Verduzco/Las Vegas Review-Journal) Follow Erik Verduzco on Twitter @Erik_Verduzco

The agreement accepted by the Nevada Public Utilities Commission will allow Switch’s growing energy load be served from a new 100-megawatt solar photovoltaic project to be constructed by First Solar, north of Las Vegas. The new solar facility is proposed to go into commercial operation in late 2016 and be named Switch Station.

It will deliver renewable energy to the NV Energy transmission and distribution grid and allow Switch to achieve one of its goals of serving its Southern Nevada customers with all renewable energy resources. Nevada Power is a subsidiary of NV Energy.

Switch was the first large Nevada company in recent years to seek to leave Nevada Power and purchase its own electricity on the wholesale market. The PUC however, in a vote in June, rejected the company’s “exit” application even with a $27 million “exit” fee to cover the utility’s investment in infrastructure that was done in party to satisfy Switch’s energy demands.

Following that vote, Switch and Nevada Power worked out an agreement to keep the company as a customer of the utility, which is expected to benefit all Nevada Power customers.

Without Switch as a customer, a filing with the PUC said Nevada Power would need another customer of similar size “to protect customers from an increase in rates.”

As part of the agreement, Switch will receive service under NV Energy’s High Load Factor tariff schedule, which was developed and approved by the PUC in 2014. This rate schedule recognizes the unique attributes of companies such as Switch that run their facilities at steady, higher demands through the course of the day and more importantly all night.

The filing says that Switch’s participation in the First Solar project makes what is already one of the lowest renewable contracts in the country even cheaper for Nevada Power customers, less than $35.25 per megawatt hour.

This compares to the average cost of solar renewable energy delivered to Nevada Power in 2014 of about $137.65 per megawatt hour.

Three large gaming companies, Wynn Resorts Ltd., MGM Resorts International and the Las Vegas Sands Corp., have also filed applications to leave Nevada Power and seek their own energy supplies on the open market. The applications are under review by the PUC.

A bill passed by the 2001 Legislature allows large companies to leave the utility if they choose do do so and pay an exit fee as approved by the PUC.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801